A recent budget proposal by New York Governor Andrew Cuomo includes increased funding to help the NY Dept. of Financial Services (NYDFS) expand licensing requirements to FinTech lenders. FinTech lending companies were previously exempt from state usury licenses. The new budget mandates that all lenders making personal loans less than $25,000 must obtain a license from the state. Licensing extends to companies that participate in loan origination and solicitation. Tribal lending enterprises, operating as arms of the tribe, are exempt from state licensing and regulation due to the sovereign status of tribal nations.
New York already has some of the strictest lending laws in the United States. The licensing expansion is seen as a direct challenge to U.S. Dept. of the Treasury’s recent chartering proposal for FinTech lenders through the Office of the Comptroller of the Currency (OCC). Maria Vullo, Superintendent of the NYDFS, previously sent a detailed letter to the OCC opposing its proposed FinTech charter system. She especially voiced concern about any federal regulatory scheme that interferes with state consumer protection and markets. The OCC is currently reviewing comments on the proposal.